Key Facts
• August 28: European short-term bonds sold off, following U.S. Treasury declines.
• U.S. Q2 GDP revised upward, triggering bond market reactions.
• German 2-year bond yield rose 2 bps to 1.94%; 10-year yield steady at 2.7%.
• French 10-year bond yield fell 3 bps to 3.48%; spread with German bonds narrowed to 78 bps.
• UK 10-year bond yield dropped 3 bps to 4.71%; 30-year yield fell 2 bps to 5.58%.
• European stocks fell 0.2% due to weak earnings and French political concerns.
• Auto stocks rose, supported by a 15-month high in July car sales.
• Consumer goods stocks gained, led by LVMH, amid optimism in demand.
Summary
On August 28, European short-term bonds declined, mirroring U.S. Treasury movements after an upward revision of U.S. Q2 GDP. German 2-year bond yields rose to 1.94%, while French 10-year yields fell to 3.48%, narrowing the spread with German bonds. UK bonds gained, with 10-year yields dropping to 4.71%, supported by speculation of reduced long-term issuance. European stocks edged 0.2% lower, weighed by weak corporate earnings and political uncertainty in France. However, auto stocks surged, driven by robust July car sales, while consumer goods stocks, led by LVMH, also advanced on demand optimism.
